EP 95: Tooey Courtemanche (CEO, Procore) Everything This Veteran CEO Would Tell Founders After Building To $11B

24:59And what I've found is you can find hungry and smart, but you're going to probably get an asshole, right? You need the humble in there. And you can get the, you know, hungry and humble, but if they're not smart enough to do... So in other words, that triumvirate, you have to have all three of them and you can't compromise on them ever, but it really works. And I love, I just love simple paradigms like that, that you can kind of live by. And by the way, I actually, that's how I choose my friends too, frankly. There's something about it that just works. Yeah. So smart is a certain level of competency.

25:33and you could probably look at, you know, whatever different resume related things on that, or maybe it just comes out in the conversation. The humble side, you've got your driver that helps on that. What about hungry? That's the hardest one. It's funny, I was having this conversation at dinner last night with one of our customers, but yeah, how everyone claims to be hungry, but are they? And it's very hard to assess that. What I normally do is I spend a lot of time on curiosity because the more, um, the more curious somebody is usually the more kind of energy they're going to bring to their job because they just are curious.

26:11So I spend a lot of time in the interview process, just talking about what people are passionate about and, and see if they, um, if they are, have a hunger around something outside of Procore. Uh, and, and usually that comes out pretty quickly. Yeah. I've sort of found that there's, um, there's football players and basketball players and football players, you tell them what to do and they execute on it. And that has a good role. Basketball players, you need to be able to move and create and all that. And within an organization, especially in the early days, if you can't create and juke and jive and go with the flow on stuff, it's going to be really hard for that person to be successful.

26:49And so one of the questions I'll always ask is like, what is an entrepreneurial thing that you took from zero to one? And it doesn't matter if you're an investment banking first year analyst or you're whatever, you're an executive. If you've never taken something from zero to one organizationally in some way, you're probably not going to make it in a startup or a venture job as well. Venture, like, you know, our calendar is blank every day and you need to justify something to keep going. It could be a podcast. It could be, you know, meeting the incremental founder and all that. But if you don't have that, it's really hard to start.

27:17Yeah, it's funny. We were fortunate when we first started is we found a lot of, by the way, motivate, there's a lot of things that motivate people to kind of have that hunger in them. and also wanting to kind of prove that they can do something. They have a little bit of a chip on their shoulder. So we're sitting here in Santa Barbara, California, right? The ocean's right there. UCSB is where we hired most of our early people from. And a lot of those folks come from towns like Fresno, California, Bakersfield, California, you know, places where these kids who have gone to school here for four years, learn how to surf, love the beach or whatever, they graduate and the fear of God comes over and they're like, oh my God, I got to go back to Fresno or Bakersfield.

27:55I don't want to go. And so we would find these people that would do anything to stay in this town. And so you find that by itself just separates people, which is these are the people that will fight and scrape to make something happen in the absence of any help from outside. I heard you say something interesting about the risk in starting a company. And I think what you said, and correct me if I'm wrong, but you need to have a unique insight and a non-consensus view of something that's going to happen. but that the number of things you need to believe will happen is exponentially correlated with the risk of the opportunity.

28:31It's intuitive when you think about it, but the number of things you need to believe, there's this Andy Ratcliffe quote or view that there's an onion and each time you're trying to peel layers off the onion to de-risk the opportunity. How do you think about that and How does it relate to Procore? Well, a lot of things had to go right, right? By the way, I heard, I stole that from a, I don't know if you listen to the Acquired podcast. Yeah, of course. I forget if it was Charlie Munger, maybe some, by the way, I'm such a huge Charlie Munger fan. Yeah, who isn't, yeah. So sad that he passed away.

29:07But taking that concept, it really kind of struck a chord with me because so many things would had to have happened in order to make ProCourse, you know, actually work. The fact that there was no internet at the job site was a huge deal for, you know, you think about it. 3G was really what actually allowed the internet to get to the job site. That didn't happen for like, I don't know, eight years until after we started the company. So so many things had to happen. You had to have that. You had to have kids graduating from college that were kind of pressing and adopting for technology. You really had to have the iPhone.

29:44You had to have the iPad in 2011. All these things had to happen. We had to survive. We had to make payroll. It's kind of a little scary when you kind of rewind the tape, the game tape, and you're like, wow. We had to fly through so many small apertures in order to make this work. and so I guess I think of it that way I'm kind of glad I didn't think of it that way back then because I might it might have been too daunting for me yeah you know yeah a lot of different things had to go right along the way thank you for listening to this episode of the Logan Bartlett show with Tui Court Motch if you enjoyed this conversation with Tui or other episodes like it we really appreciate you sharing with other people you think might find this interesting we're trying to grow the show so each incremental share or subscription on whatever platform you're listening on really helps.

30:34We talked a little bit about the number of competitors you guys had in the early days. Some did survive, I assume, and some new ones entered the market. From an execution standpoint, how did you beat the other people in the market? Well, a couple of things. One was, we got really lucky to be a platform in 2002. If you think about it, there wasn't even a word called SaaS, right? But we kind of ended up being a platform by accident. When I started Procore, I was used to in Silicon Valley and these Fortune 500, Fortune 50 companies, we would show up on site and we would install an Oracle database, right?

31:12Well, these are Fortune 50 companies. They can afford Oracle databases. But when I started Procore, the thought of, well, I couldn't afford to spin up an Oracle database for every one of our new customers that was paying us$95 a month. So what I had to do was create a single instance of a, of a code base in a, in a single, on a single server. Um, and I did that by just putting a company ID in front of every database table that I had created in the database. Um, and so we got kind of, kind of lucky that, um, that that actually happened, uh, very early on in our journey. Um, and so, so being a platform allowed us to scale so that, sorry to interrupt you, but what does a platform actually mean in this regard, right?

31:54It's a single back-end database or a bunch of constituents in it or ability to build applications? It's a single code base, multi-tenant architecture that really allowed me to run the entire business off of a single server at the time. So if my next incremental customer, all I had to do was add an incremental count to the company ID in the database and I could spin them up. So the incremental cost to bringing them online was next to zero. And there's probably something about the core operating system as well that that allows you to then build modules on the extension? Yes, yeah. And I certainly am not the best engineer in the world, but I got it right.

32:31I got it right enough, I guess, is the right way to put it. So being able to spin up a customer quickly, very inexpensively, was a competitive advantage. Most of the people that were doing what we were doing were not doing that. They were doing a hosted solution where each customer would get their own instance of the code base. And I think that was a big boat anchor on our competitors. And by the way, sometimes people are dismissive of competitors in that, but that probably made sense from their vantage point because they were servicing, I assume, maybe a higher end of the market. And so they could build the custom stuff.

33:05No, actually, by the way, I actually think that was just what you did, right? There was no other motion. Nobody at that time, I shouldn't say nobody. I think there was a couple of companies in the Bay Area that were doing this. I mean, obviously Salesforce had done this, but the pattern for this particular business model had not really been established yet. And again, I did it only because that was the only thing I could afford to do. If I had more money and I had more momentum with the business early on, I probably would have chosen the other architecture because it was the predominant architecture of the time.

33:39So you raised from Angels and Kevin O 'Connor and a few other folks along the way, but your first institutional round came from Bessemer in what year was that? 2015, I think. 2015. And you were about$9.6 million in about, I say. I think you were, I have down here very precisely$9.6 million in revenue at that point in time. What led you to pursuing outside investment from an institutional investor? I'll never forget. Steve Zahm and I were talking about the fact that we actually, hopefully there's a time in all founders' experience where their passion starts to see green shoots, where you're like, wait a minute, not only do I believe in this, but other people believe in this, and they're actually paying me money.

34:25And I think Steve kind of made fun of me, because I'm a product CEO, first and foremost, And I'm just, I love the customer and the product. Steve kind of made fun of me one day where he's like, you know, we ought to probably try to sell this software. Like, you know, you're building the software and you're driving in your Jeep Grand Cherokee down knocking on trailer doors and, you know, whatever. But I think it's time that we actually start doing this. And so I'm like, okay, well, I've never done this before. Steve had taken his last company public, a company called Digital Think. So fortunately for me, I paired myself with somebody who was far smarter than me and had a lot more experience in this world than I did.

35:01And so Steve basically laid the groundwork for this process. And we thought, you know what, if we could ladle some capital onto this business, we have proven that the folks that are buying our software love it, but no one knows about it. So the obvious investment need was to kind of spread the word. And I think that's where Bessemer and Iconic both came in and they're like, wow, this is, they would do customer calls and whatever. And they're like, this is a company that just really needs a go-to-market engine. And if they do, this might be something big. So at that point in time, I think I heard you say Bessemer underwrote the outcome or like the upside case to$300 million, like as an acquisition or something.

35:46And now, whatever, eight years later, you're doing 2x that and recurring revenue alone or something close. Three. Three, excuse me. Yeah, 3x that. And as you sort of zoomed out and went and got poked and prodded by different investors at that point in time, when you dreamed the dream, was$300 million the number that made sense? Or what were you – I'm sure it wasn't$900 million in recurring revenue. No. If I rewind the game tape a little bit, like two years prior to that, I'll never forget. We were in a really small office in Montecito where we were before this campus. And Steve Zahn was standing in his office.

36:20I think we probably had maybe 12 employees or whatever. and I walked in and he was like writing on his whiteboard a whole bunch of numbers. And he said to me, he goes, hey, Tui, I really think that this business someday could be worth $100 million. And I was like, you're shitting me. There's no way. And he's like, no. And by the way, I always look to Steve as he's the Stanford grad. He went to Haas. He knows the answers, right? I'm like, wow, that's really cool. And so then fast forward a couple of years, now we're up talking to Bessemer and everyone else. And by the way, I didn't know about this$300 million story, which I got in trouble, by the way, for saying this.

36:55I wasn't supposed to know this. And so somebody on the inside told me this. And so anyway, I've said it, so I'm going to say it. Yeah, it's in public record. It's in public record now, so I'm going to say it. I'm going to edit out all the nice things about Bessemer and Iconic, and I'm going to put in all the underestimating of you guys in there. So anyhow, I didn't really know what their investment thesis was, of course, because that's not really shared with us. But I had a feeling this could be big. I never in my wildest dreams envisioned this. So, you know, good on them. If they thought we were worth the possible$300 million in the future, then, you know, they had a good eye.

37:33Yeah. Well, I want to come back to the founder journey in a bit. But operating the business. Now, how many people do you guys have? South of 4 ,000. South of 4 ,000. And in 2015, it was? I think it was like 90. Between 60 and 90. Yeah. So in nine years, quite an exponential growth. So one of the things, I guess there's two different approaches to leadership and style. One is that you try to shore up your weaknesses and one is you hire people to augment your weaknesses. Which one of those two do you believe in more? It's not a binary answer. I think it's an 80-20 rule, but I think 80 % you have to hire to augment your weaknesses.

38:17I do think that if you're going to be successful as an individual in life and in business and everything else, you have to have a desire to grow personally. So I think it can't be 100-0. But I do believe that one of my strengths is recognizing my weaknesses and knowing who to surround. Finding Steve Zom, for instance. Procore would have been out of business long ago if I was in charge of the checkbook, right? Because all I want to do is build product and satisfy customers' needs. So no, I think it's really important that you surround yourself with people that actually do augment that. And you know, the biggest privilege, Logan, is that I have at this scale, I come to work every day and I'm literally humbled and kind of blown away by the caliber of the talent that I'm able to surround myself with because of the success we've had.

39:10It's really rewarding and I'm learning every single day and I love it. Yeah. One of the things I also heard is you've removed yourself from deal negotiations with customers. When did that happen and why did you do it? There's two stories. There's the, there's behind that. One is that it was probably about five, actually, you know what? It's probably more, it's probably like seven or eight years ago. I was the primary deal negotiator, right? And I think I had been in too many difficult negotiations where at the end, I didn't have a great relationship with my buyer. And so I was in partner. And so I had the revelation.

39:52Plus, I had brought on Dennis Landers, the head of sales, and he was so good. And he understood the whole process of the science behind selling. And mine was much more relationship building. So I saw him do it. I'm like, I want him to do that. Plus I really wanted to develop a strong personal partnership connection with my peer, uh, and not have it be a, um, a transactional relationship. And the model then, and very similar to today was, uh, we renew most of our customers on an annual basis. I didn't want to have to like put on my sales hat and go do it. I have a much, um, deeper relationship with our customers because I don't do this because they know when I call them, I'm not trying to sell them something.

40:38Um, and it's, uh, yeah. And by the way, the business doesn't suffer for it. Now I did, they, they do actually let me spike the ball, which is fun. So they'll do all this hard work and these long deal cycles or whatever. Towards the end, I'm building relationships with their executives and they'll let me come in and like, you know, ring the bell. You're holding the jumbo check. Yeah, exactly. Exactly. And I feel like I did all the work. And of course, all the people did the rest of the work. That's good. You've been fortunate enough to have some very impressive mentors in the technology ecosystem, one of which Toby Lukey from Shopify.

41:09And I'd heard he imparted some advice that I'd be curious your perspective on, but involving, and you alluded to this earlier, that you're not immune from, if you're not performing, potentially being replaced. But there's a slope of the line of the company. and then there's the slope of the line that you need to grow at as the leader of the business. How do you think about that? And how has that advice impacted you? It's funny. It's not just a leader. Everybody at the business has got to grow at the... Actually, his advice was too, if the business is growing 100 % a year, you and your team's skill set has to grow beyond that, right?

41:43That's not going to be enough to grow at 100%, which by the way, is hard. And so that really stuck with me as time went on. that there's never a time to be complacent in your growth. And so I, till this day, I look at myself every day and what am I doing to be a better leader? And so you're never done with it. The sad part about it is that you end up having to say goodbye to a lot of people along the way that got you here. And I think there's a real art to how you make those separations. And I think we're pretty good at it. But you have to be real. And, you know, some people, some founders think that they're going to kind of keep people around and just give them a kind of a soft landing.

42:28It is a the worst thing you can do. You need to be direct and honest and open with your employees. If they're not scaling, just say, hey, I'm going to help you find another job somewhere else. And we call them graduates. People are going to graduate from here and go somewhere else. And, you know, but yes, you have to be prepared to make those changes because not everybody. I mean, frankly, most people can't scale at that pace. Somebody said to me the other day, there's not a lot of founders out there that are running a billion dollar business that they founded because it takes such a completely different skill set.

42:58And so I've spent a lot of time trying to develop those skills. And really part of it is not only the skills you develop, but the skills that you leave behind, right? What got me here in the early days is kinetic energy of doing everybody's job for them and running in a million miles an hour in different directions. It is not effective at scale. The tactical insight from that point, because it's a very hard moment in the journey that you're talking about of the executives that got you there aren't going to be who get you there in the future. So it sounds like being real with them about it, not trying to, you know, dance around it and actually moving on, graduating them from the company rather than trying to repurpose them.

43:37Are those the fair insights? Is there anything else that you guys have learned about how to do it? Well, I got, so yes, one piece that kind of helps me with this was I have the opportunity once a quarter to talk to Satya Nadella as a mentor. And one of the very first pieces of advice, I was kind of struggling with my leadership team and thinking about like, how do I think about my leadership team? I mean, at the time we were a much smaller company, but we're here in Santa Barbara and I don't have exposure to a lot of different kind of peers in the same scale and situation that I was in. And I said, how do you think about this?

44:12how do you think about your team? And he goes, it's really hard to really assess your team because you're so close to them. He said, so what he does, and he goes, what I think you should do is always be in conversations with peers of your leaders. So like once a quarter, have a conversation with a head people officer somewhere else that you respect and admire, a chief revenue officer somewhere else that you respect and admire. And it really helps creative. And by the way, I wish I had known him many, many years ago and had done this earlier. it really helps to create a contrast between who you have in the seat versus what's available out in the market, or maybe not even available, but what's out there in the market.

44:51And it helps you get to a real decision very quickly as to the skill and the scale of your talent that you have on hand. So having that piece, that tool to my toolbox really, really works. How do you keep your employees motivated to the ambition of where the company is and where it needs to go? Because if you're in San Francisco, you have OpenAI over there and you have Stripe over here and you have Facebook down the corner and Apple and all that. But here, Procore in Santa Barbara is the huge fish. And I'm sure when they go home to their or go out to drinking with their buddies, they've made it.

45:31They're at a far bigger scale of a business than a lot of the other local companies, not to say there aren't other good businesses here, but keeping them aware that the mission is beyond, you know, what, what they see in Santa Barbara, but it's a global ambition. Is there any way that you found to do that? Well, it's probably the hardest thing you can do. But in the early days, it's easier because everyone, everyone feels it's us against the world, right? So it's, so, but driving a sense of purpose into your organization where, you know, the average tenure at Procore is, you know, less than five years, right?

46:07So how do you get, how do you get these folks, you know, engaged? And it's, there's not one trick, right? But it does start with hiring the right people. I, Steve has this thing, which is the team hires and fires. So you, you really do, you have to assemble the right groups of people in order to make it to be a place that people want to come to every day. And so hiring to the values really matters, but driving a sense of purpose into the organization through your mission and vision. We have a lot of people here that really do believe in what we're trying to do here, improve the lives of everyone in construction, as well as just being engaged.

46:41And the engagement, one of the big tricks that we have is we encourage every Procore employee to go to job sites. Just go sit in the job site trailer for a half day and learn, you know, see the whites of the eyes of the person whose problems you're solving for. And you will, the people that we hire tend to be like, I'm in this, I'm going to solve for this. A couple of great examples. One is we send engineers to job sites. Instead of sitting in the darkness of their engineering room, they're sitting around job sites watching the people use the software that they build every day. We tend to get engineers that will, there may be a feature enhancement that customers have been asking for for a while, engineers sees it in real life, they will code and ship that code on an airplane on the way home from that job site, right?

47:25Because that level of engagement is so high. Today, we have 36 of our largest customers here on site. And I'm encouraging everybody that possibly can be here at Procore to be in that room to really get a sense of what they are. So driving a sense of purpose and engagement, it's hard. And like I said, It's easy in the early days. The real trick is when you're shifting from first into second gear, which is we are now big enough where people might not get it or whatever. So you have to really do everything you can to drive that kind of engagement and not assume that there's a better job offer right down the road that somebody might take.

48:03Yeah. It's sort of like families with generational wealth. Like the first one makes it, second one saw how hard they worked and the third one messes it up and blows it. You know, it's one of those things you got to be cognizant of. My grandfather used to say shirt sleeves is shirt sleeves in three generations. You work in the field, make some money, and then the next generation spends it, and then the next generation has to go back to work in the field. That's good. That's a good lesson. What are the important jobs of being a CEO as capital allocator across the business? How do you think about new initiatives and where to put money, what to invest in, all that?

48:37Yeah, so there's obviously lots of frameworks out there you can use to do that. But we do the Horizons framework, so that helps a lot when we think about where to make investments. Maybe for people that don't know, can you give the brief? So, yeah, Crossing the Chasm, Zones to Win, Jeffrey Moore. Jeffrey's come and spoken to us about it. It's just a good framework, the four zones. And it's basically from the core of your business that you can't break all the way through these future investments that you want to make and how you allocate capital across those four zones. And for us, we are very disciplined over which zone we're going to put capital into.

49:18So we kind of start with our capital allocation at that level. How much do we have to invest and where are we going to put it? So you want to avoid overinvesting in the long-term over-the-horizon opportunities, but you want to make sure that you put the proper investments in the ones that are really going to pay dividends today. And so we use that as a framework where to start putting our capital. but it gets harder and harder the bigger you get with capital allocation because we service a global economy and there's owners, general contractors and subcontractors. There's the enterprise of mid-market, the S &B.

49:52There's a U.S. market and these other markets that we're in, all of which have needs for resources in order to solve their needs. So it gets more and more challenging as you do so. But as long as you use a framework and we use that framework, you will get the big pieces right. The other thing as a capital allocator for a CEO is it's not just the capital that you're going to put into the business today. But for Procore, we have to think about the capital that we have to invest. So it's the capital that we have on the balance sheet that's not going to go into the business today. So it actually even gets more complicated as you get bigger.

50:31The good news is that if you're disciplined, you will probably be right. and the other thing is that we have I do two things I come up with the capital allocation in the strategy with input from my leaders and then I have them do a bottoms up and then challenge me on that and within that challenge comes out the answer and that tends to be the right answer so we do find ourselves throughout the year making small tweaks to that because you learn things and some things don't work but also in the Horizon 4 items that are over the horizon, the big bets, you tend to make shifts on those pretty quickly because they're essentially startups in your organization.

51:14You're learning something new every single day. So as you guys have built more and more product surface area, and I don't know, how many products do you guys have today? 11. 11. So as you get those off the ground and empowering innovation and people to be entrepreneurial in what they're going after while maintaining the consistency of what is the Procore platform. Do you end up empowering like a GM type role to go after that and they get some cross-functional resources? Or what have you found about launching new products? So our business itself is very matrix. So we do have people that are focused on owners and the product organization, general contractors and specialty contractors.

51:56But the challenges that we're solving for across those three stakeholders, in the Venn diagram, there's about an 80 % overlap. So it doesn't make sense to have them focus on the commonalities and the platform features that kind of cross those things. So we do have, it's very matrix, but yes, we do have people that focus on the different stakeholders because the differences between each one of those stakeholders can be pretty big. You know, what an owner needs is far different than what a subcontractor needs. So we do, but they're not, it's not really a GM model. It's more of a specialized focus model.

52:27And you know, it was the Conway's law that you ship the code that mimics your org design. We've learned that lesson over the years too. If you over-engineer your org design incorrectly, you'll end up with a very inefficient product that is not going to market effectively. So we've learned that it's really important to get your org design right. That's one of the areas where I spend a lot of time thinking because as a business evolves, org design matters. When you go from a U.S. business to an international business, how you organize your teams gets really, really complicated. So, you know, anyway, so org design matters.

53:06On an international point, like what are the lessons in that and the org design point you were alluding to there? So it's really interesting. But from Procore's standpoint, when we were, in 2017, we went to Australia, New Zealand, and Canada. what we thought was going to happen was not what happened it was a new motion for pro core obviously we're a u.s company we hadn't done this before and what we learned was we were kind of spoiled by being a known brand in the u.s market and we kind of showed up and this is being euphemistic we kind of showed up in these new regions thinking like we're here you know and everyone's like that's great who are you you know yeah so uh what we learned along the way was uh the the team that does the beachhead landing org design has got to be a very small, tight, um, autonomous team, uh, that basically can find the referenceable customers, uh, do the brand marketing, build, build the brand, uh, and start building this organization.

54:09But much like when you invest in a small startup, it is very quickly. It gets to the point where you actually need a more of a formal design because that's not going to get you to the next level. So you have to be as a leader, you have to remember that though you have a mature organization here in the U S um, that little, uh, startup has got to be there. Their talent has to evolve and probably has to change out as you grow. So you, that's the talent side. And on the org design side, you definitely need somebody back at corporate headquarters that is, that is, um, uh, helping them get the resources that they need in order to be successful.

54:44Um, and we learned that somewhat of the hard way because, um, if they don't get the resources they need, they can't be successful. but it's also hard to listen to a five person team when you're running hard and fast in this market. So do you send someone from HQ to the local market and then hire in people with the cultural expertise as well? Or how do you make that work? That has worked really well for us, primarily because of the people in the culture aspect of it. We basically are transplanting a portion of Procore down there. That has worked very, very well for us, both in Australia, New Zealand and in UK, Ireland and Canada.

55:19Yeah. So that works. There's a trade-off that exists with expediency of decision-making. And on the other hand, there's refinement of inputs. Yes. And those two things are at odds with one another. How do you think about this trade-off and being assertive and decisive, but also methodical and thoughtful? It's not an exact science at all. Um, my style is I like to gather is I like to gather probably more information than most before I make a decision, but I'm also very principled. So I kind of, I know where I stand on the important pieces, uh, and on the pieces that are, uh, newer to me or, um, the blast radius is smaller.

56:07I'm going to take more time, uh, uh, trying to understand it's not really consensus building, But as you grow, you hire people who know more about their function than you do. So I really try to just ask the right questions and listen. I have this whole thing around inquiry over advocacy. I would much rather sit in a meeting as a leader and ask for input as opposed to tell everybody what the answer is. And some leaders actually are the opposite. They know the answer. They go in and tell everybody how to do their job. And we've hired people from large companies that you would know the brand of, that the CEO runs the business that way, who are very uncomfortable with my leadership style.

56:47Because I'm very, very open and I want to hear people's input before I commit to a decision. Now, as my wife likes to say, the indecision is the decision. So you can't not make a decision. And actually, it's funny. Steve and I used to always say, people would ask us why we're successful. And we would say, we make one better decision every single day than all the bad decisions we make, you know? But the key is, is that we make the decisions. And we also look at problem spaces with the blast radius in mind. So we very much consider what the impact's going to be. And that's critical. What about balancing growth and profitability?

57:26You've seen this pendulum swing back and forth and you've gone from more bootstrappy to more high growth. How do you think about that? Yeah, so we actually are very fortunate to have lived through the phase of the market the way we have, which was for the first, what, 20, 19 years of Procore's history, it was grow, grow, grow, market share, market share, market share. And for a business, a vertical SaaS business like Procore that's in an industry where it's going to be winner takes most, that really matters. So we had the latitude to grow kind of at all costs, right? Um, now two things happened to Procore.

58:04One was, uh, in 2009, we ran out of money and nobody was going to invest any more money in Procore. So we had to get really scrappy, really, by the way, in the early days we had no money too, but we, Steve and I have no how to be capital efficient because we had to, right. And so over the years we've, we've had to have that. So it's kind of in our DNA to be capital efficient, but then we were growing, growing, growing. Uh, and then it was around three or four years ago where we started saying, okay, well, um, there are significant operational efficiencies that we can bring out of this business and not hamper our growth.

58:38And so we started doing that. Now we started at like negative 35 % operating part. It's been a long way to go. Uh, and then we were marching along there and then along the way. the world that you live in changed their mind and decided that it was all that mattered was profitability. and the good news was we already had started on that journey and we had been marching away and giving back operating margin more and more over time. And so here we are delivering significant operating margin last year and again this year. But we never do it at the expense of growth. So to answer your question, we prioritize growth over operating margin slightly.

59:19So if we ever see an opportunity to grow this business, we're going to make the investment if we feel confident in it. And fortunately for us, there's a lot of things we can do. But we also know that the more we focus, allocating less capital can actually speed you up. And that is very unintuitive to a lot of founders, but it's actually true. Scarcity actually drives velocity and it's just something that we know. And so we don't feel like we're sacrificing anything. And we came up with this term efficient growth, which is kind of just what we run the business off of. And when I said that to the leadership team, like, look, our new mantra here is efficient growth.

1:00:01We need to make every decision kind of through that lens. I was wondering, like, am I going to be fighting my leaders on this? Because they're going to be like, no, no, no. You know, the good news was a pro core, they adopted it. And then it went throughout the entire organization. So we have people making decisions around not doing a catered lunch, right? Which we normally would do and just go in and do it a regular lunch and doing things like that, that actually matter all the way through the organization. Was there a single all hands or something that you like really galvanized around it and did, was it, I assume hard for some people to shift that, that mindset?

1:00:35Well, I think, and that's my takeaway was it was surprisingly easy for this organization. I'm not a hundred percent certain why I'm grateful that it was. Uh, but yeah, I mean, we, I don't, I can't think of one difficult conversation I had with one leader around the fact that they weren't getting it. That's interesting. Yeah. What advice do you wish you had about running a business that you would give to founders today or that you do give to founders today in the role of being a mentor to early stage companies? It's, it's all, there's nothing that matters. Well, first you have to have a good product and you have to have big Tam, right?

1:01:08Uh, but beyond that, it, nothing matters more than people. And so you can be fixated on, I know founders, they get very fixated on their mission and they don't spend enough time thinking about the people, but it's all about talent. And you just have to get really, really good at that. And you have to get real fast. So I wish I, I've developed a very strong muscle over the years and how to attract and retain top talent and also to jettison poor talent. But I wish I had, I wish I had had a mentor early on who kind of taught me that. Because everything I learned, I learned somewhat the hard way. I wish somebody would have helped me with that.

1:01:44So I spent a lot of time with founders trying to figure out how to teach them that. Pricing is an important derivative of all things related to the business. And you guys made a conscious decision in the early days to pursue volume-based pricing versus seat-based pricing, I guess. The specifics of it might be a little niche and bespoke to your industry or how you guys think about it. But can you talk through that decision and how that downstream sort of impacted a bunch of business considerations as well? Yeah. So this will sound strange to most people that aren't in our business, but we have volume-based pricing.

1:02:22So if you're a general contractor doing$100 million a year, you'll pay a certain basis points based on the number of products of ours that you run on an annual basis. But let me back up and tell you how we got there. First and foremost, This business is all about connecting everyone in construction on a global platform. Owners, GCs, and subs, and material and equipment suppliers, insurers, and lenders, everybody that's involved in a project, everybody has got to be in the same ecosystem, sharing the same workflows and the same data. I knew when I started Procore that if I did a per seat license model, which was, that was really the only pricing model that existed at the time, that our customers were going to start making value decisions around Logan doesn't need a license.

1:03:06He's only going to be on the job for whatever. And then all these workflows will break and my vision wasn't going to happen. So I knew early on that that wasn't going to work. So I remember talking to an early customer who was using a client server solution that was dominant in the industry at the time. And they were seat license business. And he's like, well, I'm going to leave this, this, this platform, not platform, this client server environment, I'm coming to Procore. And, you know, how much is it going to cost? And I'm like, well, I'm still trying to come up with a yardstick, right? So I said, how much, you know, how much volume are you doing every year?

1:03:41I actually didn't, I think I said, how much construction are you doing every year? He goes, oh, that's really interesting. You asked that because I buy my insurance based on my construction volume that I do. And he said, you know, if you're thinking about how to measure my business versus a competitor or another business, construction volume is a really good indicator of the size and scale of the business. And so all I did at that point was I took his per seat licensing model for, and it was like$35 ,000 for X number of seats, and then his volume. And I'm like, okay, I'm going to come up, I'm going to back into an equation that comes up with the number of basis points that equates to what he's paying per seats.

1:04:17And that was the genesis of our pricing model. And it was hard in the beginning. And frankly, it's even hard sometimes today for customers to buy into that. But CFOs love it because it actually, they only buy what they're going to use. And it gives them the ability to kind of manage their consumption as opposed to it just being a bunch of licenses that aren't getting used. And it's aligned with their success, right? Or their scale and their growth rather than headcount, I assume, is a little bit orthogonal in some ways to the outcome. It's exactly aligned with their scale of their business. Their success and our success are very much aligned.

1:04:58I want to back all the way up to your path to starting Procore. I would say we talked about Steve. Steve had a very traditional, probably Silicon Valley, Stanford experience. You did not. It wasn't the traditional educational path to being an entrepreneur. Can you talk about early days and college and what led you to the Procore? Yeah. It's interesting as you kind of get to this point in life when you reflect on everything that happened to you. When I was in high school, it was very clear that I was not a good student. I was curious, but I was only curious about the things I was curious about.

1:05:44And so it turns out I have a reading disability and also what you would call an autodidact. You give me something that I'm passionate about and I will become an expert on it in just a number of days. In fact, right now I'm going through a course right now to become a timber frame carpenter. So I'm going to build a timber frame barn. And so I'm learning all of the joinery and everything else. So that's my personality type. that there was not society wasn't built for people like us, right. We didn't fit the mold. Um, you know, my guidance counselor in high school was like, I don't know what to do with you.

1:06:21You know, anyway, I go to university of Arizona, uh, and I get distracted and I essentially get kicked out. Uh, and so I have to figure out what I'm going to do. Uh, and so I go and, um, become a security guard at my grandfather's building where he lived and lived in an assisted living situation, situation, uh, and decided that I didn't want to do that. So I went back to community college and I got a 4.0 because I realized, um, it wasn't about anything other than the fact I wanted to prove to the world that I was fricking smart. So I just brute forced my way, you know, through some community college classes and I did pretty well, uh, ended up being accepted into university of San Francisco's pre-med program.

1:07:01Uh, went, went up to the Bay area to do that. Uh, I had a few months before this is the fall semester began, got a job working in construction. I'd grown up in construction. I knew construction and I'm passionate about construction. Uh, anyway, the fall came and I decided that it wasn't time for me to go to school cause I was having so much fun building. Um, I essentially never went back. So I'm a essentially a college dropout, uh, without any of that experience. Uh, and, um, you know, but I found Steve and Steve had all the credentials and he was, uh, you know, he was just a great partner to kind of bring all of that kind of credibility and learnings.

1:07:41Is there a, uh, I mean, I guess follow your passion and find what you're uniquely interested in, but is there any, uh, lesson you would impart? You have a son, uh, like that, that you have shared in that whole thing. That's interesting for people. Well, I think it's, again, it's know thyself, right? I know my weaknesses. Um, if you're not going to be a doctor or a lawyer or an accountant or whatever, um, and you don't need to get a four year degree, you should, the sooner you recognize that the better, because now it's, now you're in the camp of, I have to develop a skill of some sort. Uh, and hopefully you have some passion around something that you can develop a skill around.

1:08:17But, uh, I think it's really important that we find a place for the people that have as much, um, passion and horsepower as I have, uh, to have a place in the society where they can actually contribute. Um, and you look, you know, A lot of founders are similar to me. They don't fit into the normal mold. But if you empower those people to actually go do what they're meant to do, you can get a lot out of them. It seems like we've maybe over-rotated or definitely rotated pretty far to the four-year liberal arts school degrees instead of the more practical, applicable things that translate to direct jobs in there.

1:08:57I know you are passionate about this, but can you speak about that? Well, yeah. So I'm so passionate about this. Like for instance, one of the biggest crimes in America is the fact that we took shop class out of high school. I remember shop class was just – it taught me so much about how to work with my hands and gave me so much confidence that I could do things. So there's that aspect of it. There's, um, there's, you know, the trade schools that are out there. There's, there's so many different ways you can make a living in this world that isn't a liberal arts degree. Um, you know, so, um, I was just talking to all of our customers that are here on campus and we were talking about the, the labor shortage in construction and, um, you know, uh, high school guidance counselors do not get credit for sending kids to trade schools.

1:09:51So they get, and by the way, they, there's this perverse, um, kind of incentive program, which is, you know, I think they get more points on their card if they send somebody to Stanford than if they send somebody to Santa Barbara City College, and they get zero points for sending them to trade school. So there's this inverse incentive program that keeps people out of trades, which is a huge crime. So that's an area where I really want to focus. And then it's the stigma of entering a job that doesn't have the shine and polish of a doctor, lawyer, accountant associated with it that we still have to overcome.

1:10:27So we live in a society that I think doesn't quite understand that a pipe fitter can make six figures a year being a pipe fitter. And a college degree person that has an accounting degree might make$65 ,000 the first year with four years of debt behind them. And maybe AI is going to come for in some way. Who knows? And by the way, AI is not installing pipe anytime soon. No, yes. We're a long way away from that. Back up to the Charlie Munger thing. I think he had a quote that I consider myself top 1 % in taking into consideration incentives, and I still underestimate it every day or something. It's interesting how many societal ways we're shepherding people to this path that I had no idea on the guidance counselor placement point system that's like discouraging, um, you know, trade schools and stuff.

1:11:17Yeah. Yeah. Yeah. Yeah. We do live in an interesting time. I was talking to one of our customers about that, which is for hundreds or thousands of years, society worked pretty much the same way. Like I was talking about how when I was a kid, um, I had to be home when the street lights went out, right. That if I wasn't home before the street lights went out, I was going to catch almighty hell from my mom. Uh, and then you think, you know, that was 75 years of, that probably. Prior to that, you had to be home before the sun came down. And then we lived through this era where now everybody's connected, right?

1:11:46And they're always going to be connected forever. So we are going through a massive transformation of how the society runs and operates that we get this vantage point of seeing that nobody, no other generation before us was ever going to see. And it's both a blessing and a curse. Oh, it's crazy. I mean, if you think about like 1600 to 1750, if you drop someone from 1600 into 1750, the world would look mostly the same to them. If you take someone from 1870 and drop them into today, I mean, just to think about the amount of change we've had in our lifetime, and it feels like we're just on the, it's exponential, right?

1:12:22Yeah. It's definitely compounding in a meaningful way. Well, like if somehow I had gone to sleep in 1986 when I graduated high school and you woke me up today, I would be, by the way, we were talking about it. We all had Encyclopedia Botanica. That's where we got our information. And we were all, I was talking to my customers about this and that, you know, if, if you had to do a book report on animals, uh, all the boys wanted to do it on lions and all the girls wanted to do it on horses. Right. So essentially the next day when you do, you turn in your book report, everybody gave the same book report essentially, because you only had five paragraphs to gather the, the data on your subject and like what a world we live in today where.

1:12:59It's, it's, yeah, it's fascinating every single day and the manifestations of it. I guess I'm curious the artificial intelligence point that you guys are witnessing. Are there specific workflows or processes or things that you're observing or you see the opportunity for AI with Brocore's business? I just got a great example of one from one of our customers who's a subcontractor. Subcontractors, the majority of their costs are people, right? You know, they're people fitting pipes or whatever. And so if you can save, if you can get the same job done with one less person, that drops into the bottom line and you're, you know, you're doing well.

1:13:37This one company has figured out how to basically get more done with less people using AI, essentially getting the right person to the right job on the right day with the right material and the right equipment. It's a really hard thing to do. And they've, they're using patterns in their data to get people to do that. And they're, they're saving so many man hours. It's, it's shocking. It was actually, you know, I think her example was they're taking a job that would take 12 people yesterday, and now they're doing the same job with the same quality, same velocity with six people. Have you guys started to input it into your product itself?

1:14:12Most definitely, yeah. So the beauty of Procore, again, being a platform, is we have this corpus of data, right? And construction, though, everything is a prototype. The processes within construction are the same over and over again. So if you're building a 120-bed hospital in Miami-Dade County, we have in our database, we have 3 ,000 of those around the U.S. or globally that we can then look for pattern recognitions and try to help identify challenges before they happen or next best actions for people to take in the field. So we were just all talking as a group with our customers about what we're going to look back on today.

1:14:49And we're going to say, wow, this is the time where this industry changed dramatically. It's going to be much less of a lone wolf at the job site kind of trying to assemble and figure stuff out to a data-driven business. Yeah. And I guess you guys benefit from being back to the platform point. but you have the centricity of data to make those recommendations on this is deviating from the standard pricing of that pipe, or you're missing this part that checks a box from a compliance or safety standpoint or whatever. Here, I'll give you a great example. Everyone knows about the supply chain challenges.

1:15:25Supply chain challenges really hit the construction industry hard during COVID. And most of that has worked its way out, but except for complex electronic equipment. And so if you're building a building that requires a lighting control system or something that has complex electronic equipment in it, certain manufacturers are taking about 24 months to deliver the equipment. Well, that's forever. That will stop a job from moving forward, and that's critical. We know in our system which air handlers or which lighting control systems are actually getting delivered quickly and which ones are being delivered late.

1:16:03So if a contractor is putting together the plan in Procore for their next project and they put in a lighting control unit that we know has a 24-month lead time, we can pop up and tell them, hey, you might not want to do that. You might want to look at these three other ones that are actually coming much faster. It's that level of detail that will – and by the way, that means that a project that would normally take 36 months can now take 22 months. And that's real money for everyone. It's fascinating. How did an eighth grade job at a cabinet shop influence your founding journey? So I was a, prior to that, somewhat of a privileged kid in a privileged society down in La Jolla, California.

1:16:43And I hadn't really seen much of the world. When I walked into that cabinet shop that day and they welcomed me, I was working with carpenters. And these were people that lived in a different part of town than I'd ever been to before. but they also had a different mentality than everybody else. These were like people that were crafts people that took pride in what they were able to do. And they did things that were awe-inspiring to me with their hands. And so all of a sudden I was like, I found my people. It kind of sounds funny. I say it that way, but I did. I'm like, I want to be like these people.

1:17:14And by the way, my dad was a banker and I'd gone to like the big corporate boardrooms and, you know, and the bring your kid to work stuff. I had no interest in any of that. I wanted to be a crafts person. So that got me excited about it. And all I wanted to do was learn. And fortunately for me, Woody, um, um, Jessperson put me, who ran the company, put me into the journeyman, uh, apprentice carpenters program at the local union hall when I was in high school and gave me the opportunity to become a, an apprentice carpenter. Um, and that just kind of sealed my fate. Funny thing was too, in 19, like whenever they came out, like 83 or whatever, I got a TRS-80 computer and I loved basic.

1:17:52I loved programming. My dad was saying not that long ago to me, we were talking about like my childhood and stuff like if you looked at my passions, right, they collided into Procore's technology and construction. So it's fascinating. And your mom also got you a book, How Things Work or something, which I assume was around the same time. Pretty formative period. She actually, funny enough, she got it for me, but she kept it on her bedside table as I was growing up. And we would just spend lots of time going through it and just, and then, oh, and I'll never forget. So then I got to be fascinated with how things work.

1:18:23So I started dismantling stuff around the house. I'll never forget, I dismantled my dad's corded drill and I couldn't get it back together again. And so I kind of like put it in a drawer where he couldn't find it. And I was just waiting for him to come, you know, and, and, and kind of rip me apart. And he finally was looking for it. I had to fess up to the fact that I, I did it too with a carburetor. I did my, my, one of my first girlfriends had a car that back in the day, he had a carburetor and she's like, I have a problem with my carburetor. I'm like, I could fix it. I took, I took it apart.

1:18:53It was like probably, I don't know, 140 pieces. When I put it back together, there was like 17 pieces left missing from the, yeah. And I'm like, oh, I am so much, I am so much. Yeah. I assume ex-girlfriend after that. Yeah. She was not, she was not very happy with me. The early days of like the original Insight or the kernel for Procore was, was it actually rooted in your own home and sort of seeing how inefficient the process was? Like what was that? You guys moved from San Francisco down here to Santa Barbara and your wife said, you can come with me or not, but I'm going there. So maybe take us through the actual kernel of Insight.

1:19:28Yeah. So she did. So I was at the time doing this HR consultancy. So I was on planes all the time. I was in Charlotte and I was in Dallas. I was never home. Was it like PeopleSoft? Like integration? Yeah, I was actually putting web front ends on PeopleSoft. So PeopleSoft at the time was client server. And I was in the interactive voice response business. Do you know what that is? Yeah, yeah. So I was putting telephony front ends on PeopleSoft. This is before the internet. For people that don't know, very, very sexy stuff. But IVR. So PeopleSoft is an HR company that was started by Dave Duffield, Daniel Boosery, which they've now started Workday, right?

1:20:02Which is the cloud version of it. But IVR is like when you call a phone and it's basically like press one for this, two for this and that kind of stuff. Yes, for all the old timers, you used to have to call your bank to get your bank balance and put in 900 numbers to get to it. That's IVR. And so it's really a technology interface to analog phones. And how I got into that is a whole other story. But I, yeah, so I was doing that with these kind of Fortune 100 companies and traveling all over the world, putting these telephone front ends on. So you can enroll in your benefits program at Bank of America or whatever, because that was the way you did it.

1:20:43They had call centers, too, at the time, because if you couldn't figure out your numbers, you had to hit zero and you go to a call center. But Bank of America had a call center. I think they had like 300 people in it. Only for Bank of America employees. So if I'm an employee of Bank of America and I need to enroll, it's open enrollment. Employee stock purchase plan. And so I'm calling in. Now it's obviously all on the internet. But I'm calling in and saying, press one for this, press two for this. And that was how you did the triaging of what plan you wanted to pick. Yeah, and I also became the voice.

1:21:09So I was like the voice of Applied Materials University. Oh, wow. So I would program the call tree, and I'd be like, press one, four, and then I'd hit save, and then I'd program the call. Anyway, it was very weird. But at the same time, the industry evolved, and all of these companies started coming to me saying, hey, I was working for somebody. Hey, do you want to, there's this new thing called the internet. Can you put a web front end instead of a telephony front end on front of this? And I'm like, sure. So that's kind of how I made that transition into that part of my world. So, and I got good at writing software for the internet.

1:21:44And so then you moved down here in 2000, 2001? Yeah. Yeah. So I eventually was, it was, it was in 1999 actually. Okay. When I got the phone call, she's like, we're moving to Santa Barbara. I was in Charlotte at the time. And I'm like, no, we're not. And she said, no, yes, my, your son and I are moving there. Yeah. Yeah. I don't know how we define we, but. Yeah. We is really not you. She's like, I don't see you ever anyways. And you know, anyway, so we ended up coming down here, bought a house. She wanted to remodel it. And that's kind of where, so then I would fly in on Thursday nights. And the first thing I'd do is go to Kinko's because I'm really passionate about scheduling.

1:22:20So I was doing all the scheduling on this job with Microsoft Project. And so I would go to Kinko's and print out a big Gantt chart. I'd go back to the job site trailer and I'd meet all the subs. I'm like, okay, last week you said, you're going to do this. What did you do? And whatever, you know, and next week, what are you going to do? And so I'd write on the thing and then I'd put it back into Microsoft Project. And then anyway, uh what i learned was a lot of times when i showed up a lot of things that they said that they were going to do that week didn't get done what i really found out was by the way right there is a surf spot called rincon which is one of the most famous surf spots in california what i found was when there was a point break out there um nobody would go to work right and so i was i created a correlation between my schedule and the surf report and anyway so i'm like wow there's um there's no certainty in the schedule, but these people all know what they need to do.

1:23:10So if I can web enable this, I will. So essentially I took the, that's a funny story too, but essentially I took the needs I had as a person building a house, watching my money fly out the door with no accountability and no telemetry into how it was going to, I'm going to corral this whole chaos and I'm going to put together a system that's going to actually allow me to manage my project. And there's probably a lot of dependencies of if this person needs to do this on that time and a bunch of derivative considerations. And so the logic building all that stuff out. Yeah. And if the carpenter gym and drywall, drywall or whatever, Mark, are sharing information about the, it's a six foot break and we're in, they're both not going to show up.

1:23:51Yeah. That's funny. In your mind, what's the coolest construction project that ProCourse worked on? Anything that stands out? So many cool ones. It's such a privilege. By the the way last week I went to go see a data center that I'd never been in a data centers are highly secure facilities. It's like government facility. So I got somebody kind of essentially sneak me into a data center under construction. But I will say, uh, without a doubt is, uh, it's a project called Eater, I T E R it's in the South of France. It's a, I think 35 nations have coming together to build a nuclear fusion reactor.

1:24:22Uh, and, uh, it is, first of all, it's in the middle of South the French. So it's, it's vineyards as far as the eye can see. And then there's this machine that's the size of a city, uh, that they're building there. Uh, and, uh, just, just to be able to walk through and be on the inside of a nuclear fusion. I was like literally inside the, uh, the fusion reactor itself. Uh, it's not done yet. You know, you're like, I can't believe I'm able to do that. And the scale is just, you say a city. I mean, how big is it? Is it actually? it's um it's a it's a whole complex of buildings that are the size of in some cases like multiple sports arenas put together and you know ceilings that are you know i don't know 150 feet high like it's it's yeah and bolts that are this big around like it's this stuff's big but by the way if you think about it when they conquer this fusion uh the world's going to change right the dependency on energy is going to hopefully go away.

1:25:25And I just look at it like, man, the things that we're building are going to change the world. And that's a privilege to be able to see, you know, that's super cool. We talked about you mentoring founders and getting to meet early stage founders, but, but I heard you say that you have gotten good at figuring out who has the fire in the belly to like go the distance on that. I guess that's partially my job as well. But I'm curious, are there any things that you've found either question-wise or deterministic, like things you can figure out from that? You know, it's funny, the best way I kind of test it is I challenge them on their beliefs around their product and their mission and their vision.

1:26:06And the ones that just take the punch and come right back and basically are bought in are the ones that I believe are going to have the the, the kind of the kinetic energy necessary to get through. Uh, it's funny. Um, so there's a technology, uh, program at UCSB for people. It's like an entrepreneurial program. And so I've talked to them several times and they'll, they'll come down here. Um, and I'll get it. I'll often get the question, which is like, you know, um, I'll ask people like, what do you want to do? And when people answer, I want to be an entrepreneur. I'm like, that's not a thing, right?

1:26:39Like you don't become an entrepreneur. That's a basket of like a category. There's like specific things underpinning that. Right. And really what it is, is that you're going to do something that is, is novel and unique more than somebody else. And you're going to deliver value that hasn't been discovered yet in a way that's going to make you differentiated in the marketplace. Then people say you're an entrepreneur. But so I always say to them, like, I'm like, you want to be careful because people that say they want to be an entrepreneur, they haven't found the thing. So you just want to be careful that you're not, you're not just doing this because you admire people who are successful entrepreneurs and you want to, you want to be Mark Cuban, right?

1:27:17Like you can't be Mark Cuban, right? Like you can go do something and you can, but, but I, I'm very cautious of founders that are doing it for the wrong reasons. Interesting. And so, so does that mean that they need it? There needs to be a unique insight and resonance with the problem that they're going after rather than just wanting to solve something and finding the opportunity within it. Absolutely. And better, and hopefully they actually really understand the problem space that they're getting into. And that means that they've either been exposed to it. It's something they're knowledgeable about.

1:27:50And it's also funny with these entrepreneurial programs, which is most of the products that they're building up there are related to student issues. Oh, of course. Like, oh, textbook aggregation or student housing or whatever. And I'm like, you realize students have very little money, right? Yeah, exactly. But it's their only exposure. It's their worldview. is, yeah, it's one of the - They didn't have the privilege of being in the eighth grade and working in a cabinet shop. That's right, that's right. Yeah, it's a funny thing that it's hard to, without working to some extent, especially with B2B problems.

1:28:21Consumer, you can have a unique insight just as a person in the world, but with B2B, you're not really entitled to an opinion about construction platforms unless you are somewhere in the industry or have some exposure to it, right? So it's interesting. Well, the beauty of our industry too is a lot of people, the construction industry, is huge. A lot of people grow up, you know, their families and I mean, everyone seems to be in construction or knows somebody in construction. So, uh, but it's even more, you know, uh, out there, like, I don't think a college grad is going to write legal software, right?

1:28:53Yes. Uh, but they might be able to, you know, compete with Procore because there's a lot of people that understand construction. Yeah. That's interesting. Um, we were just talking about, uh, you know, random points of serendipity along the journey of people that intervened and sort of changed the course of your life as we wrapped. I'm curious. It sounds like someone comes to mind. Yeah. Well, by the way, there's a handful because I think we all have them. But the one that really comes to mind is someone I wish I could find. And I don't think I'll ever be able to find this person again. But it was when I was a carpenter in the Bay Area before I was supposed to go back to USF.

1:29:25And it was late in the afternoon on a Friday. I was working on building a deck for some high net worth person under the Sutro Tower in the Bay Area. And the personal assistant to the owner of the house would come out every day and we'd have lunch together and just talk. And it was a Friday and it was the end of the day and I was putting my tools away and she walked out and she goes, she goes, you know, Tilly, I think I'm, I'm just going to, I want to say something to you. And I said, what? She goes, you seem like you're in the wrong job. You seem like You grew up in a good family. You seem pretty intelligent.

1:29:59You seem like you could be doing more than what you're doing or building a deck right now. And I went home that day. I quit my job. The next day, a guy named Skip Steveley, who was running a technology company in the Bay Area, literally knocked on my front door and offered me a technology job out of another story, which should have never happened. But I just happened to be home because I quit my job. And that would have not happened if this person hadn't had given me that thought. That's fascinating. Yeah. And I wish I don't remember her name. And I, I, I, but yeah. But I changed the course of, of the, and yeah, I mean the, the randomness and the serendipity of some of these interventions.

1:30:32I, uh, yeah, I, we were saying like, uh, the folks at Lead Edge, Nimeh Mehta, who was one of your investors, like sort of connected me with battery, which otherwise I wouldn't have gotten hired in the venture. I had nothing that jumped out from my resume that said, oh yeah, this person is going to make it, which is, uh, yeah, I'm, I'm indebted to them for, for having done it. as they remind me occasionally. So we all have these people and we all have to be, take a moment. And I always say like, sometimes I'm shaving in the morning and I have a moment where I'm just like, there's like four or five people that without their kind of belief in me, I don't know if I would be doing what I'm doing today.

1:31:07Yeah. You know? It's cool. You've taken to building complex Lego structures as like a therapeutic exercise. Can you speak to why you enjoy this so much? It's funny how uncomfortable of a subject this used to be for me. Oh, really? Well, because it's like, I had somebody make fun of me one time. Like, I'm a grown adult. They were making fun of me about it. And I was like, I'm like, I can't believe that I'm reacting like a sixth grader on this one. Yeah, yeah. The bullies from, yeah. Yeah, but I'm a builder at heart. Yeah. You know, like I said, I'm doing this whole carpentry program right now to become a timber frame carpenter.

1:31:43And so I'm always wanting to build something. It's not always practical to put your tool bags on and go out and build stuff. What I like about Lego or twofold, one is you get the satisfaction of building. By the way, same as a business, right? Every day I'm building Procore. I look at that. That's probably one of the reasons why I'm so engaged with Procore is I'm never done building it. But with a Lego set, you start with something and when you're done an hour later, you've actually done something, even if it's a component of something bigger. And you get this sense of satisfaction of actually doing something, building something.

1:32:18So for me, it's that. The other is that, and my wife will attest to this, Procore consumes me, right? She always goes, God, I hope someday if you're not at Procore, you figure out, like, you figure something else out. Yeah, another passion. Yeah, because this is like, this is all you do. And so it really does help me shut off the kind of never-ending problem-solving Procore engine that's in my head and allows me to, like, not think about it. I also like to hike a lot. And I find that if I go off the trail and I rock hop up the riverbed, it's the same sensation. You can't stop and you can't mid hop stop and think about Procore.

1:32:58If you get your footing wrong, you're going to fall and kill yourself. Yeah. So like I find like doing things like that are great distractions as well. Interesting. Yeah. Have you ever looked at Lego's business? Oh, yeah. By the way, I just listened to a podcast, three part. It is fascinating. It's insane. And how they started off with, like, they were a toy company and they were failing. Yeah. Yeah. It's a fascinating company and structure and all of that. Really impressive. I really want to meet the current CEO. I'm very, very interested in the way he thinks about the world. How do you use Lego in the business?

1:33:32So we have a program where we educate students. We want to really get them excited about construction early on. We partner with Apple to do some stuff. And we're very interested in solving the labor problem. And we think, what's the best way to do that? Let's get them young. So we have a Lego game that we have put together. In fact, and so the students use Procore to build a Lego building. And there's RFIs that have to happen. There's submittals and there's change orders that have to happen along the way. And actually, the building that they're building is this building. Oh, no way. It's an exact replica.

1:34:07So it's a full board game with an instruction manual and as well as an access to Procore. How old are these students? We do K through 12. We also, I've done it. Yeah, yeah, yeah. All of us kids. Yeah. But yeah, it's a really good way to get people to kind of understand what Procore does. Can you custom commission things from Lego to build designs of your building? You certainly can. Oh, interesting. There's a whole industry out there around this where, yeah, you can go and have, you can send a set of blueprints of your house and they'll make you a replica of it. That's fascinating. And it's actually Lego proper.

1:34:42It's not like some offshoot derivative brand. I don't believe in the offshoot. Yeah. We have a purist at heart here. If it's not Lego, it's not Lego. What's your favorite structure that you've actually built? I just finished Notre Dame. Oh, cool. And it's like a 9 ,000 piece and it weighs 40 some odd pounds. And how long does that take? Well, it's funny. People keep asking that and I do it in fits and starts. Yeah, got it. So like I'll do it like an hour and a half after dinner or whatever. Sort of episodic. So yeah, if I added it all up, it's probably 30 hours. Wow. And what do you do with them?

1:35:15Are they displayed around your house? Or you break them down? No. Well, two quick stories. My wife will not let them stay in the house. She refuses to. Sounds like she's a tough customer. She runs a tough ship in house. There's something to be said for having a strong wife. Yes. Yeah. By the way, talk about humble. She keeps me as humble. That's good. That's what you need. She is so unimpressed with me, Logan. Oh, that's good. It is absolutely remarkable. So we send these things to our regional offices. So like our Dublin office has the Titanic. Oh, cool. And, you know, the Paris office has got Eiffel Tower.

1:35:50And like, you know, so I do that. Plus I selfishly keep, I have a kind of a man cave up at my ranch. And so I keep the construction equipment ones I build. Like I built a D11 bulldozer and I just build a construction crane. And you can control it with your iPhone. You know, the hook, the crawler and everything. It's really pretty cool. That's fascinating. It's a fact. So you finished Notre Dame recently, but is that the favorite? Well, yes. The funny one on the favorite was I built the Millennium Falcon, which was probably 8 ,000 pieces. Totally. Also huge and big. I actually bought that. One of my partners is kids are really into it.

1:36:27And so as a thank you, he got me to come over to Red Point. And as a thank you, I bought the Millennium Falcon for his son to do. Well, it was probably my favorite. It was really intricate. But the funny thing was, I'd been working on it for a long time and it was on the dining room table and it was done. And my wife's like, okay, well, that thing's got to get out of here. And I'm like, okay, well, I can't really do it now. And she's like, well, we have people coming over. And so we had this piece of furniture in the dining room. It was really tall. She's like, well, why don't you put it up there?

1:36:56No one will see it. So we pushed a chair up against the piece of furniture and I I went over to the table and I held it. I put it up above my head and I'm step up on the stair, one foot up on the chair and the chair fell. And I fell over backwards. No way. And 8 ,000 pieces exploded, right? And it was funny. You're stirring around, picking it up before people come over. Well, the first thing that happened was my wife started crying because she had seen me put like 40 hours of my life into this thing. And she's like, I just made him break this thing. But it was the moment where we both realized, I don't care about that much about them after they're done.

1:37:30Totally. It's the project I care about. So like swept it up, put it in a garbage bag, gave it to my friend's kid, let him go off and do it again. There's an interesting lesson there to bring it all the way back to the picking the board members you work with and the people on the journey. Like the process, if you're not enjoying the process, the outcome isn't that satisfactory, right? There's not like some hills you climb and get to the other side and you're like, I've totally made it. You find new hills or things to compare yourself to along the way. I had never thought of it this way, but you are a hundred percent right, which is I am much more interested in the journey than the destination.

1:38:07Though I like the destination has this Nirvana state, but I also realistic it's never going to happen. Uh, but there are certain people that are only fixated on the, on the Nirvana state. Um, but yeah, I, I, I take a perverse, a passion that kind of enjoyment out of the chaos that's today. The process of it. It's interesting because I'm sure you've now found that you just recalibrate to new expectations. And so when you're talking to Satya Nandela or Toby from Shopify or whatever, now you have a new peer set. Once upon a time, your peer set was just the people in the construction industry trying to get by.

1:38:41And so if you're too fixated on the outcome, you're just going to recalibrate to new people. And so you'll always feel unsatisfactory of where you're going because Satya is running a bigger business or Toby or whatever it is, right? It's just like you have to enjoy the journey of it all because otherwise you recalibrate in some ways. Yeah, no, it's a, I live in this very interesting world where I'm solving a problem that most people don't know or care about, but yeah, this is, this is, this is my world and I'm having a blast. It's a fun one. Well, thank you for doing this. This was great. Fun conversation, Logan.

1:39:16Always. Yeah. So thank you.